Bitcoin, eutherum, litecoin… Some market observers compare the capitalization of these virtual currencies to stock market giants such as Google and Tesla. An investment for which it is better not to lose the support where these cryptomonnages and passwords are stored.
Cryptomoney, a market of 1,000 billion dollars? This is what some market observers think, comparing the capitalization of Bitcoin and its little sisters to the giants of the stock market such as Google and Tesla. But the anecdotes of early amateurs desperate to find their Bitcoins, lost on a discarded hard drive or on a USB key with a forgotten password, illustrate the disappearance of a large number of these currencies, reducing the size of the active market.
Bitcoin climbs to new heights
To calculate the capitalization of cryptomoney, one simply has to multiply the number of « coins » issued by its value – more than 18 million bitcoins at nearly $40,000 (the historical record is $42,000), or nearly $700 billion, for example. For sites like AssetDash.com, which compares Bitcoin to stock market assets, after quadrupling in value in 2020, Bitcoin is worth almost as much as Facebook, slightly more than Chinese giant Alibaba and is the ninth most expensive asset in the world. Adding other cryptomoney, such as ethereum or litecoin, the market even reaches $1 trillion (€820 billion), a first step towards the $68 trillion global stock market.
JPMorgan’s analysts compare this capitalization to that of gold: the market for yellow metal for financial purposes represents 2.600 billion dollars, bitcoin would simply need to reach 146.000 dollars to compete with it.
An article in the daily Financial Time newspaper points out that some Bitcoin has already disappeared from circulation, making those who doubt Bitcoin, a decentralised asset with no direct connection to the real economy, strangle.
According to the press, an American developer has lost the password to a USB key where he had 7,002 Bitcoin (about $280 million), while a British man begs his municipality to help him find his hard drive, which was inadvertently thrown into a city rubbish dump with 200 million pounds of Bitcoin on it, promising a reward of 25% of the Bitcoin.
« Most of the lost Bitcoin was acquired » in the few years following the mining of the first Bitcoin in January 2009, Philip Gradwell, an economist at Chainalysis, told AFP, estimating that nearly a fifth of the Bitcoins in circulation are at addresses where they have not been moved for more than five years. Industry players were more amateurish, prices were lower: until 2013, bitcoin was worth 100 dollars at most. According to Gradwell, « one or two million of these Bitcoins belong to Satoshi, » the pseudonym behind which the creator of the cryptoney is hiding.
Growing investor interest
In addition to these potentially lost bitcoins, many investors do not participate in daily trading and invest for the long term. The recent boom in the market would therefore only involve 5 million bitcoins, Gradwell adds. Patrick Heusser, head of trading at the Swiss Crypto Broker, also believes that trading volume, as seen by looking at the activity on the blockblocks of the various cryptosystems, is a better indicator than capitalisation: « there are currencies like ethereum and litecoin, » with capitalisations of around $138 billion and $10 billion respectively.
« There’s a lot of activity on the ethereum block, while it’s completely dead on the litecoin, » which has only seen its value rise because of the wider interest in cryptomoney, he says. Some « reports compare the capitalization of bitcoin to that of gold, but I don’t think that’s a very useful measure of the health of the market, » he comments. After part of his career trading traditional currencies, he sees the cryptomoney market as promising but still « small fry » compared to other financial markets.
While many investment funds have taken an interest in cryptomoney in 2020, Bitcoin’s volatility has so far prompted financial institutions to devote a limited portion of their portfolios, still mainly made up of equities and bonds, to it.
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